Q and A: Addressing rural poverty in Wisconsin

May 28, 2013

Katherine Curtis and Leann Tigges

A lot of the talk on helping the state’s economy has focused on creating more jobs. But when it comes to alleviating rural poverty, what matters isn’t just the number of jobs, but also the kinds of jobs, note CALS researchers Katherine Curtis and Leann Tigges from the Department of Community and Environmental Sociology.

Curtis studies “spatial inequality,” the unequal amounts of resources, services or qualities in various locations, along with such related elements as population loss, socioeconomic disadvantage and environmental sensitivity. Her research forms the core of a UW-Extension program that provides educators with information for local programming to reduce poverty and meet the needs of economically vulnerable residents. Tigges teaches courses on labor markets and place-based poverty. Her research examines the livelihood strategies of rural Wisconsin families, the changing employment practices of Wisconsin manufacturers and the ethanol industry as a source of employment in Wisconsin.

The two addressed questions about rural poverty in Wisconsin in the spring 2013 issue of Grow magazine.

Q: What does poverty in rural Wisconsin look like?

Katherine Curtis: One thing that makes rural poverty particularly interesting is that it’s actually hard to see. Often, when considering urban poverty, neighborhoods with boarded windows, litter and graffiti, or other symbols of disorganization and economic hardship come to mind. Poverty in urban places tends to be clustered and visible. In contrast, rural poverty is “hidden” in the sense that impoverished people and households are not spatially clustered. The rural poor live near the financially secure or, in especially sparsely settled communities, they tend to be isolated from other people. The rural poor are often out of view.

Q: How serious is the problem of rural poverty in Wisconsin? Has it increased in recent years?

Curtis: For the state as a whole, poverty grew from 8.7 percent in 2000 to 13.2 percent for the period covering 2006 to 2010, marking a nearly 52 percent increase in poverty. At the same time, poverty increased in rural counties in Wisconsin. In 2000, the average poverty rate for rural counties was 9.6 percent. For the 2006–2010 period, poverty had grown to 12.6 percent. Poverty increased similarly in the state’s urban counties (7.2 percent in 2000 and 10.1 percent in 2006–2010). However, the level of poverty was consistently lower among urban counties compared to rural counties.

Q: Can you please define rural poverty for us?

Leann Tigges: The poverty level in the United States is around $11,000 a year for a single person. You add about $4,000 per person to that to determine the level for different-size families. So for a family of three: about $19,000. If you make more than that, you’re not considered “poor” and if you make less than that, you are. That’s true whether you’re in a high cost of living area or a low cost of living area.

Many people think that people in rural areas actually need much less than urban people in terms of income, but a lot of things besides housing take more of a rural family’s budget. Transportation costs can be higher, utility costs can be higher. So lots of things that rural families need are more expensive. If you just adjusted poverty for cost of living, which would mainly be housing, you wouldn’t capture that rural–urban difference.

Q: Tell us a little bit about what contributes to rural poverty.

Curtis: One of the biggest issues in rural communities is economic development. Some of the main drivers in Wisconsin are actually underemployment and unemployment. When we look at the distribution of poverty across the state and different counties, we notice that it tends to be clustered in the northern part of the state, where there is less economic development. Specifically, we think about forest-related industry as well as the agricultural industry or extractive industries in general. When we have a community that might be solely dependent on a particular type of industry, if anything happens to that industry, whether it’s due to local reasons or, more likely, national or even global industrial reasons, then that community is susceptible to contractions.

Single female-headed households are another factor commonly associated with poverty, and we also see it in Wisconsin. Recent census data show that the proportion of single-father households also is increasing, and at a faster rate than single-mother households. Household structure is a factor in poverty because it identifies the number of potential earners. When you have one adult earner, by simple math, you can understand that that household is going to be making less than a dual-earner household.

Q: What can we do to address the problem?

Tigges: The problem of poverty is a problem of job quality for rural people. Joblessness is not as big of an issue, but what’s happened is that the jobs aren’t paying enough to lift a family out of poverty. Rural jobs tend to pay less, they tend to have worse benefits and they tend to be more seasonal and part-time. So job quality is a huge issue. There’s still a rural–urban difference where rural single-earner poverty rates are higher than urban single-earner households, and that’s because job quality is generally lower. So, if you ask what would be an anti-poverty strategy it would be to improve jobs. Not just providing more jobs but improving wages.

Q: Can you describe a situation that lifts someone out of poverty?

Tigges: One way of looking at it is having people pay for fewer of life’s necessities with their income—for example, having more subsidies for childcare, more public transportation, more relief in terms of health insurance. All of those things can take big bites out of family income, and any emergency in those areas can throw a family into poverty or make it impossible for a family to climb out of poverty. So, if you can’t improve wages you need to reduce the things for which the family has to use its wages.

The other factor about wages, though, is that in most Wisconsin counties the living wage for a family of three is around $17 an hour—and that’s about $10 more than the current minimum wage, $7.25 an hour. The minimum wage, which is raised only when Congress takes action, has failed to keep up with the cost of living. In 2011 it was worth only about 70 percent of its value in 1968. Consequently, a person who worked full-time, year-round at the minimum wage in 2011 fell $7,732 short of the income necessary to lift a family of four one dollar above the poverty line. We’re not going to lift people out of poverty with adjustments to the minimum wage unless we finally look closely at what “minimum” is supposed to mean and who is really affected by the minimum wage.

People tend to think that minimum wage workers are mostly teenagers, but an issue brief published by the Economic Policy Institute last August showed that raising the federal minimum wage to $9.80 by July 2014 would directly affect 409,400 of Wisconsin’s 2.5 million workers. But because people working for wages close to the minimum are likely to have their pay scale adjusted by their employers, an additional 175,653 Wisconsin workers also would benefit from an increase in the minimum wage. Of the 585,000 workers likely affected, 25 percent would be parents and 83 percent would be age 20 or older.

Jobs aren’t paying enough to lift a family out of poverty.”

Q: What changes do you see as most likely in coming years?

Curtis: One of the things we anticipated was the increasing importance of underemployment versus unemployment. It’s not necessarily an issue of the number of jobs but of job quality. So, if things move ahead in their current direction, what we would anticipate is a continued increase in poverty. But, on a positive note—something can be done about job quality and wages. Communities can pursue economic development strategies that reduce poverty and benefit all members of the community.

Tigges: And political will can influence the wage levels. Last March, Senator Tom Harkin introduced the Rebuild America Act, which included incremental increases in the federal minimum wage and required indexing it to inflation after it reached $9.80 in July 2014. That step alone could improve the situation for one fifth of Wisconsin workers. But we don’t need to wait for the federal government to act. States can set their own minimum wage levels and can index them to inflation to maintain their buying power without annual legislative action.